There are a number of places that you can shop for car finance loans including banks, credit unions, and finance companies provided that your credit score is relatively decent. But what if it isn’t? What if you’ve had a bankruptcy, charge-offs, or even a repo? What do you do then? In this case, most people turn to what is referred to as “second chance car finance” in order to finance or re-finance a vehicle. For many individuals today, the current US economy has made it difficult enough to obtain auto financing, so this gives them a second chance.

Advantages and benefits of Shopping Local

As the name of this type of loan implies, second chance car finance is a loan that is designed for individuals who need a second chance at getting a vehicle financed. They have been turned down and denied credit in the past based on their credit history. So the primary advantage of this type of loan is that it provides them with an opportunity to find a vehicle and get the financing they need. It also helps them to start re-building their credit. You don’t just get a loan. You get a chance to prove how creditworthy you truly are.

Considerations before financing

One of the most significant considerations is that second chance car finance places a great deal of importance on verifiable income. This is usually what lenders look for first, so they will want proof of this such as bank statements, income tax returns, pay stubs, etc. Your current address and phone numbers are also required along with other personal information are necessary.

Another important aspect is how your car finance loan rate is determined. This is going to be based on certain elements including your past credit history, the type of car loan you are looking for and the timeline of that loan.

You can also obtain direct or indirect car finance. Direct funding involves the loan originating from a bank or other lender whereas indirect funding typically originates with the car dealer themselves. In this case, the auto dealer usually works with a particular lender in order to get you approved for the amount of the car loan that you need. Finally, you also need to decide on whether you want a secured or unsecured auto loan so you want to make sure that you know the difference between the two before committing.